MIKROMB (0112) - Holistic View of Mikro MSC with Fundamental Analysis & iVolume Spread Analysis (iVSAChart) – 23 May

Mikro’s Sideway Price Movement Will Eventually Break Through Resistance or Break Through Support?

 

Mikro MSC Berhad primarily engages in research, development, design, and sale of analogue, digital, and computer controlled electronic systems or devices for use in protecting and monitoring electrical system in Malaysia and internationally. Its products include various relays, such as combined overcurrent and earth fault, overcurrent, earth fault, earth leakage, voltage, reserve power, and voltage and current control relay products.

 

The company also offers volt and amp meter, power factor regulator, and annunciator. In addition, Mikro MSC Berhad provides technical support and maintenance services. Its products are used in electrical, electronic, and other industries. The company was incorporated in 1997 and is based in Sepang, Malaysia.

 

Based on Financial Year (FY) 2015 full year results, Mikro achieved close to RM 40 million turnover, which is considered to be a small size enterprise. Other aspects of the company’s latest financial results are illustrated in the table below.

 

• Mikro Msc Bhd	FY 2015 (RM’000)
  Revenue (RM’000)	39,985
  Net Earnings (RM’000)	8,257
  Net Profit Margin (%)	21.563
  Total Debt to Equity Ratio	0.015
  Current Ratio	4.827
  Cash Ratio	1.212
  Dividend Yield (%)	3.274
  PE Ratio	10.52

 

 

Since FY2010, Mikro revenue has been in an impressive up trend from RM 20 million to RM 40 million in FY2015. This represents a 2 times increase in 5 years or an average year to year growth of 14.6%.

 

In terms of net profit, Mikro achieved an even higher growth of 2.2 times increase in 5 years or an average year to year growth of 17.4%. Having a net profit growth rate which is slightly higher than the revenue growth rate is a great sign of effective cost management and the company’s product is able to demand an increasing premium price in the market. Net profit margin wise Mikro scores an amazingly high 21.6%, considered to be top class in the manufacturing line.

 

In terms of company’s debt, Mikro has very low total debt to equity ratio of 0.015. Its very low liability business leads to achieving a good current ratio of 4.83 and cash ratio of 1.21, which are strong characteristics for company that can withstand tough economic situations. As for dividend yields, Mikro provides a 3.27% dividend yield is pretty good and dividend amount has been increasing for the past 3 years.

 

In conclusion, although Mikro is a small size enterprise, it has solid financial records and consistent growth performance for the past 5 years. On top of these great financial results, Mikro has been continuously expanding its production line. In last quarter of 2015, Mikro has purchased a new warehouse in Kota Kemuning as well as issuing new shares to raise expansion capital. These expansion efforts further support Mikro’s revenue growth which naturally leads to upward movements in share price. Therefore, the current share price sideway movements most likely will end up in a breakthrough of resistance to scale greater heights. Current PE ratio of 10.52 is considered to be on the low side for manufacturing sector hence it is a great opportunity to acquire this share.

 

 

iVolume Spread Analysis (iVSA) & comments based on iVSAChart software – Mikro MSC

 

 

Currently, it can be observed that higher prices are rejected around RM0.54 to RM0.56, likely go through the process of absorption. It is well support at RM0.50 level and should the market takes out the 3 Sign of Weaknesses (red arrows), it is heading for new ground with more upside. Stop loss at RM0.50

 

MIKROMB (0112) - Holistic View of Mikro MSC with Fundamental Analysis & iVolume Spread Analysis (iVSAChart) – 23 May

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